Russian equities dropped for the fifth day, falling the most in month, as stocks including OAO PhosAgro and OAO Novolipetsk Steel tumbled after MSCI Inc. announced its semi-annual rebalancing results.
The Micex gauge retreated 1.3 percent to 1,373.65 by the close in Moscow, the most since April 15. PhosAgro, Russia’s biggest fertilizer producer, closed down 4.9 percent at 1,277.70 rubles. OAO Russian Grids, formerly known as MRSK Holding, slumped 9.3 percent to 1.233 rubles, the biggest decliner on the Micex. Novolipetsk dropped 4.9 percent to 45.47 rubles, while its global depositary receipts fell 4.7 percent to $14.50 in London. All three companies sank the most in a year.
Russian Grids was excluded from the MSCI Russia Index along with Novolipetsk’s GDRs, according to yesterday’s statement from MSCI. VTB Capital and Sberbank CIB had expected PhosAgro to be added to MSCI Russia after the company’s controlling holders, Andrey Guryev and his family, sold a 9 percent stake in the fertilizer producer in April to gain entry to the index.
“Being cut from an index is definitely bad news for these stocks,” Sergey Fundobny, head of research at Arbat Capital, said by phone from Moscow.
Russian Grids has fallen 42 percent over the past 12 months, while NLMK’s GDRs lost 13 percent over the same period. Funds that track MSCI indexes readjust their portfolios based on the changes before the rebalancing takes effect on June 3.
Crude oil, Russia’s chief export earner, reversed declines, adding 0.9 percent to $95.18 a barrel in New York. Russia receives about half of its budget revenue from oil and natural gas sales.
“Rather surprisingly, PhosAgro was not included” in the gauge, Sberbank CIB’s analyst Iskander Abdullaev, said in an e-mailed note. “Russian Grids was removed from the headline index due to falling outside the market cap requirements as a result of poor performance since November.”
MSCI announced the results of its rebalancing after the market closed yesterday.
OAO Mechel, Russia’s biggest coking-coal producer, declined 2.8 percent to 113.10 rubles, the lowest since February 2009. The American depositary receipts lost 3.3 percent to $3.56 today. MSCI cut the company’s depositary receipts from its Russia Index, according to its statement.
OAO RusHydro, Russia’s biggest renewable energy producer, retreated 5.8 percent to 51.50 kopeks in Moscow. The GDRs declined 4.9 percent to $1.598. MSCI cut the stock’s weighting in the Russia Index to 0.79 percent, according to the report.
OAO Inter RAO UES, Russia’s third-largest power producer, sank 5.4 percent to 1.29 kopeks, the most since April 17. Inter RAO’s board recommended not paying 2012 dividends, according to today’s regulatory filing. The amount of shares traded was 1.9 times the three-month average.
OAO Dixy Group, Russia’s third-largest food retailer, surged the most on the Micex, adding 3.6 percent to 464 rubles. April sales rose 25 percent to 14.6 billion rubles from a year earlier, the retailer said today in a statement.
Stocks extended declines as more Americans than projected filed applications for unemployment benefits last week and new-home starts fell in April, damping appetite for riskier assets.
The volume of shares traded on the Micex was 10 percent below the gauge’s 30-day average, while the index’s 10-day price swings rose to 18.624.
Russian equities have the cheapest valuations among 21 emerging markets tracked by Bloomberg. The Micex trades at 5.1 times its 12-month estimated earnings and has lost 6.9 percent this year, compared with a 10.6 multiple for the MSCI Emerging Markets Index, which has dropped 0.7 percent in the period.
The dollar-denominated RTS Index fell 0.8 percent to 1,380.58. The RTS Volatility Index, which measures expected swings in stock futures, added 0.7 percent to 21.86. The Bloomberg Russia-US Equity Index of the most-traded Russian companies in the U.S. slipped 0.7 percent to 93.08 today. The Market Vectors Russia ETF, the largest dedicated Russian exchange-traded fund, tumbled 1.7 percent to 26.62 in New York.